Understanding Commercial Leases – A Quick Overview


If you have a business, and you need a place to operate in your city or town, you will likely have to rent space at a shopping mall, located where you can get walk-in traffic. Renting commercial is going to be more expensive, in most cases, then renting from a landlord, but the idea is still the same. Most real estate owners will lease their property to you which means you are under contract to pay a certain amount for a specified period of time. You have probably heard of people breaking their lease, and having to come up with the remainder of the money, even though they are not going to be there for the full duration of time. To understand the benefits and drawbacks of commercial leases, here is a brief overview so you can understand how these work and how you will be able to find the best deals on a lease for commercial property.

How Commercial Leases Differ From Residential Leases

There are a couple things that you should know about commercial leasing so that you are not surprised by things that may arise. For instance, there are far fewer consumer protection laws governing these types of leases in comparison to those that are residential. An example of this would be a substantial amount of money requested by the real estate owner for a deposit, or they may have more leeway in terms of inspecting the property once you are inside. There are also no standard forms, prompting many owners to create their own lease that is going to be much more favorable for the owner and not the renter. Almost all of them are done with language that makes it very difficult to break the lease and not have to pay the final amount owed. There is also very little flexibility in terms of negotiating different terms after everything is signed, something that you need to be very careful of before signing to lease any property.

Critical Issues To Consider

An example of an issue that you need to be aware of is how long the lease is actually four. The lease term could be one year, or several years, during which time the owner may actually right into the contract that the amount of the payment can increase incrementally, or if they deem that it is necessary without needing your approval. The security deposit should be returned to you, and you need to make sure that the language of the documentation that you are signing strongly suggests that you will get the deposit back. Sometimes it can be worded to make it very difficult for anyone to get their deposit, even for the smallest infraction or damage that is done to the property, so make sure that it is clear what is necessary to get your deposit back. One other thing that should be included in the documentation is whether or not they will take care of problems while you are there. If you have plumbing issues, damaged caused by the weather, or repairs that need to be done with hallways or staircases, this will be covered by the owner. If you have your lawyer read it over, it should be very favorable in terms of allowing you to have similar rights as you have come to expect with residential leases. Finally, it’s critical that you will be allowed to mediate or arbitrate disputes in a legal setting protecting your rights, something that may not be possible for you due to the wording of the agreement itself.

The main thing to remember with commercial leases is that you are going to be paying a substantial amount of money, and you must pay what is agreed upon in full area by understanding this, as long as your business is going to be profitable, or has been profitable at a different location, you should have no problems making the payments. Be sure to consult with a legal professional on any lease that you sign for business purposes to make sure that your rights are protected. In most cases, owners are very reasonable with their demands, but it just pays to be safe when dealing with commercial leasing documentation, allowing you to feel comfortable when signing these agreements knowing that your rights will be protected.


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